Market Update: Shortened Week Still Long on Profits

For quite awhile now, I've hinted and even explicitly stated there would come
a time I would don the proverbial bear suit and switch to fading rallies. But,
because part of my unbiased trading style is the discipline to wait for confirmation,
TTC members have had to forego really juicy doom and gloom forecasts and settle
for trading both sides of the tape... and making money! As I've also said several
times, successful trading has a huge psychological component, and keeping our
heads in the game, in addition to hours of hard work, is a key factor of our
ongoing wins.

Remember that last Friday ended with a selloff that took everyone by surprise,
and had many screaming the top was in, again. It wasn't easy posting
a chart that afternoon showing only a w2 low. But, that's what I saw and truly
believed, so I went with it and seasoned members bought what turned out to
be a head-fake low. In last week's update we stated the following:

That position is already in the green, but if we rollover on Monday morning
and confirm a top was in, we'll be ready to put on the bear suit. But, baring
any news timebombs next week, we don't think that'll be the case.

Looking at a chart of Monday morning's S&P open, you can clearly see that
the trade was never in jeopardy. We gapped up Monday and basically trended
up into Fridays close. Between the summer doldrums and the Fourth of July holiday,
traders, and myself, were becoming restless watching and waiting for trades.
The week basically drifted up like a hot air balloon. This typical summer trading
might be something we need to get used to from here, but then again there's
the strong possibility we're at an important juncture.

The Nasdaq faired even better this week, actually leading the markets and
making a 6 ½ year high on Friday. The chart below is from last weeks
update, as I was arguing the fact that this market was telling you additional
highs were to be seen while most of the trading community only saw a top already
in place. You should remember, and have profited very well, if you looked into
last week's trade setup.

As expected, we achieved our low for wave 4, just where we thought it would
be, and from there we did a moon shot of 90 points! Now the advance is to powerful
to continue to label it as an ending diagonal, but that's okay, since we're
on the correct side of that move. As I stated last week, if you had fallen
into the trap of believing the markets had topped, you have no one to blame
but yourself. This market was screaming at traders, but not many saw it or
bothered to listen. Every one of our members were presented with this analysis
and that's how even the newbies were able to be on the correct side of the
trend for the last two weeks.

Now that we have reached our target in the Nasdaq, what will be in front of
us? Well, we don't have the same situation in the Dow and S&P, but highs
were made in both the Nasdaq and NYSE. With that, I feel that we are at a point
where we can either get that blowoff/capitulation move, or buck the trend like
we've been doing all along and finally this time take seriously the possibility
of an important turn ahead of us while many others stay bullish. But that decision
won't happen before next week as this week's volume was too light to give much
credit to the advance. We do respect these levels, but I must say---It is time
to SHOW ME THE MONEY! Otherwise, I might need to slip into my bear suit and
you know there's plenty of dust on it.

Another sign of a possible top looming is the run in momentum stocks. As seen
in the chart below names like Apple, Research in Motion, Baidu, and Google
bring back the feeling of 1999, especially seeing them rise in a parabolic
move, like there's no tomorrow.

Speaking of Google, readers should remember this particular stock has been
discussed many times in these updates. A year ago it was forming a contracting
triangle which we showed a 125 point reward trade while only risking 3 points.
Sure enough, Google never went under those 3 points and proved our analysis
correct as it went to its target above $500. At that point, I made the statement
that while Elliot Wave theory said the move was over, I had a problem believing
that its proprietary Fibonacci target of $541.62 would not be hit. Since then
it had traded down, as to be expected, but I continued to believe there would
be another swing up to achieve that target. Without any good Elliot Wave reason,
this stock climbed its way back and Thursday nights close was one penny above
the $541.62 target! Thursday was a big affirmation of what a friend told me
many years ago, that the markets might be trading around the influences of
Fibonacci levels and that we may be counting the waves price action leaves
behind as it vibrates around these ratio projections. What Google does from
here will tell me much more about the stock and in essence maybe what the Nasdaq
might have in mind as well.

Over the past few months I've also continued to stress the importance of sentiment
and that also, as of this week, has proven to be effective confirmation of
important inflection points. As the chart below of Thursday's ISEE close shows,
if we can continue to break out it will signal another important piece of what
we are looking for.

Finally, we've also be curiously awaiting an important cycle in the market
that goes back decades and comes due the week of July 23rd. A couple other
cycles are due at or about July 15th, offering a roughly two week period where
the market could be susceptible to a trend reversal. Considering these cycles
and several other factors as a warning, we're ready to aggressively look for
a top in the near future without sacrificing the willingness to stay long a
market possibly approaching a blowoff top.

Since weekly readers do not have the liberty of being updated throughout the
day, I must have you understand that as of this weekend this is not a call
for a top in the markets, nor do I take such a call lightly. This is simply
the prudent recognition of being within 30 points of long standing targets
with some of the correct ingredients for a top starting to show up. Show me
what I need and I will turn bearish, but not until then. Don't assume the markets
will start heading down, particularly when I'd rather see them go up a bit
more. Keeping an eye on news events at this point is wise as I believe there
is a boogeyman out there that could set things in motion.

Whether you're currently a trader or investor, this, more than ever, is the
time to join a community that has correctly called the markets since its inception
18 months ago. For the monthly fee of $89, you have access to technical analysis
of most financial markets and commodities, a live chatroom, proprietary trend
charts and much more.

To make things a no lose situation, join before June 13, 2007 and if
you don't like it after a full week's try, send me an email asking for
a refund, No questions asked.

Most members find the experience educational and many have explicitly said
so. This testimonial below was just received this weekend and is one of many
that I received showing what TTC does for its members.

Dom,

I am now a 2 week newbie, and,
generally speaking, a permabear. I am writing to let you know that I have
made more profit in the 2 weeks since joining TTC than I did the first
5 months of 2007, and ironically, the majority of these profits came from
the long side of the market.

You have taught me some things
about market movement in a short period of time that have allowed me to
trade from the long side of the market with comfort (as much comfort as
a permabear can have being long for more than a minute and a half!). For
example, this morning when the market was selling off when I was long at
1534ish, and you posted the SPX cash chart with a probable turning point
(my interpretation) at 1521.21,

It permitted me to stay the
course with a stop below that number, anticipating the rally.

I thank you for providing the
service of teaching us, and also setting for us to trade. IMHO, your service
is a valuable asset for any trader, at a ridiculously low cost!

Michael

Members

Be sure to visit the Weekly Maps. As many of you know, the Weekly Maps section
of the site is where I lay out the big picture ideas for the following week
along with charts from any other markets that seem to be playing a part in
what we trade. And TRUST ME, the weeks ahead are important!

Also make sure you are aware of TTC's new addition to help many keep an eye
on the Forum updates without needing to constantly login to check. We made
this neat feature that you open to your desktop and you will be able to see
when someone posts, and who is posting. There are some handy links there as
well as a small time frame trend chart. I'm sure I'll find other things to
add to it.

This update is provided as general information and is not
an investment recommendation. TTC accepts no liability whatsoever for any losses
resulting from action taken based on the contents of its charts, commentaries,
or price data. Securities and commodities markets involve inherent risk and
not all positions are suitable for each individual. Check with your licensed
financial advisor or broker prior to taking any action.